Say you are trading baseball cards at a table.
You decide to trade your Mickey Mantle for a Willie Mays with me.
But in order for everyone to know that the trade has been made we both hold up our cards for the rest of the table to see. By holding them up, we prove we own them—and we state that we are trading cards.
The rest of the table needs to agree that the trade is happening. And then confirm to everyone else that the property exchange has taken place.
The crypto currencies are the baseball cards.
The individual addresses are the people who own the cards.
The miners are the ones who confirm ownership, the trade, and the new ownership for everyone to see.
All of the trades are lumped into blocks. Each block contains many trades. The first miner to confirm that all of the trades are legit, gets a reward from the system—and everyone doing the trades.
Every few years the amount of awards that the system provides is cut in half. Eventually it will stop altogether. At that time, it will be complegtely based on transaction fees. That is called “halvening” which means the reward is cut in half.
There are a lot more intricacies with the process. But the important thing to remember is that the total number of coins ever to be mined is 21 million. And 19 million have already been produced. So, as time goes by the increased transactions AND the stable supply will cause smaller and smaller fractions of bitcoins to be used—and the overall price will go up.
Bitcoins are divisible to 8 decimals (As in 8 bytes in a Bit). So the basic unit of a bitcoin right now is less than a penny. So, they are still “affordable” and will be for a long time to come.
Sounds as if you saying that all that computing power is for the sole purpose of transaction processing.
...so who determined the finite quantity of notional currency?
What stops NSA computers gaming all this?
Is there any way to buy that penny's worth of bitcoin with a transaction fee of less than a couple dollars?